September, 5, 2005 No. 36

September, 5, 2005

No. 36

ROMPRES PUBLICATIONS:

I. ECONOMY AT WORK

 Foreign direct investments worth 1.5 billion euros in H1

 August-October 2005 economic projections brought to fore

 Romanian investors can make investments on foreign markets

 Low-cost airlines - wind beneath market’s wings

 European corridor 4 not to bypass Romania II. ROMANIAN COMPANIES

 Menarom Galati to be privatised

 Romcarbon’s profit skyrockets by 520 percent in H1

 Pipe-maker Mittal Steel Roman posts profit in H1

 Private operators competing with CFR Marfa

 Orange Romania starts works on new headquarters in Cluj-Napoca

III. TRADE

 Romanian-Czech trade to exceed 800 million euros in 2005

 Romania’s foreign trade advances in January to July 2005

 Romania’s trade deficit nears 5 billion euros over January - July 2005

IV. FINANCE-BANKS

 GDP up some 5 percent in H1

 Instant money transfers double in 2005

 Government to choose between tax increases and expansion of tax base

 Central Bank’s norms on limiting risks carried by retail lending come into force

 Romania, France sign bank supervision protocol V. INDUSTRY-AGRICULTURE

 Textile industry depends on imports and banks

 Some 30,000 hectares of hybrid vine to be cleared VI. EUROPEAN INTEGRATION

 Olli Rehn: Romania should deploy all efforts EU entry

 EU accession in January 2007 is Romania’s main objective

 Romania dismisses option of delay in EU entry, Foreign Minister Ungureanu says

 PM awaiting sincere, fair evaluation from European Commission

 Romania is on the right path towards EU accession in January 2007, says Luxembourg Foreign Minister

VII. TOURISM AND OTHER TOPICS

 Foreign tourists make record shopping at craftsmen fair in Arad

 Romanian tour operators warn about VAT increase triggering price rises

I. ECONOMY AT WORK

The total value of foreign direct investment into the Romanian economy hovered around the 1.5-billion-euro figure, growing 15 percent as compared with the same period last year, a release of the Central Bank (BNR) informs. According to BNR in the first six months of 2004 foreign direct investments amounted to 1.29 billion euros. Taking into account June alone, the value of FDI rose by almost 30 percent, totalling 531 million euros. BNR data reveal that the bottom line for the analysed period is a positive figure of 536 million euros. For the same period in 2004 portfolio investments showed a negative bottom line of 117 million euros. Subscribed capital in the first half of this year grew 35 percent, to 890 million euros.

According to data provided by the National Office of the Trade Registry (ONRC) the value of share capital foreign companies had, was of 658.3 million euros. The ONRC calculates FDI considering the subscribed social capital at foreign companies and joint ventures. In June this year the value of subscribed capital was of 194.3 million euros, 7.6 times greater than last year when a value of 25.4 million euros was registered. The top five of investors see the Netherlands in pole position, followed by Austria, France and Germany. US ranks only fifth while Italy comes in sixth though in June alone 235 of the 1,035 start-ups were Italian.

The Romanian Agency for Foreign Investment (ARIS) announced that this year’s target is a FDI level of 3.2 - 3.8 billion euros. How high the FDI level will go depends however on the pace of privatisation in the second half of the year and on the activity of the State Assets Realisation Authority. In 2004 FDI amounted to 4.1 billion euros.

August-October 2005 economic projections brought to fore

Industrial activities, alongside construction, retail trade and services will advance in August-October from the previous three months, read projections of commercial company managers made this August and carried by the National Statistics Institute (INS).

The processing industries are expected to record increased outputs over the same period. Labour is expected to continue on a downward trend, while prices for industrial products are estimated to go up at a higher pace than in July 2005.

The construction sector is also expected to report output growths, on the existing contracts and orders, while the labour employed in this sector would continue on an ascending path.

The polled managers have estimated the goods sales to increase in August to October. Prices of retailed goods are projected to go up, but at a slower pace than in the previous months.

Service company managers are expecting the demand for services to advance overall. The situation of the service sector has improved considerably over the past three months and the managers of service companies have predicted a stable number of employees and a rise in trade prices for services and service billing.

Romanian businesspeople do not see eye to eye about accession costs

Less than a year and a half to go until 2007, the moment when Romania is slated to join the European Union, local businesspeople have started to seriously consider the costs implied by integration. Most of them laid emphasis on the negative impact on profits created by implementation of EU standards and by the rising wages, Nine O’Clock daily reported on August 30.

“Businesspeople became aware very late of the fact that the accession will create a shockwave which most of them will not be able to handle” said Viorel Hrebenciuc, President of the Parliamentary commission for EU integration, quoted by a Romanian financial weekly.

Implementation of the EU environmental standards is one of the issues that involve millions of euros worth of costs. From approximately 2 million euros in the furniture industry, investments in environment protection can hit 100 million euros in the chemical products industry and 800 million euros in the oil industry. This may be the reason why Dinu Patriciu, owner of the Romanian trans-national Rompetrol, is one of the most Euro-sceptical businessmen. He declared “European Integration costs money, doesn’t bring money” adding that Romanians should adopt the American

model in order to become competitive in Europe, instead of changing legislation for the sake of checking all EU negotiation chapters. Ioan Soleriu, executive officer at Azomures, involved in the chemical industry, said that so far over 20 million euros has been spent on environment standards and that if all the investment were made in the short term, production would become impossible to sell. By October 2007 the plant is expected to close down unless a 100 million-euro investment is made in environmental protection.

In the food industry, bearish estimates show that some 5 percent of all slaughterhouses will keep functioning after the accession moment. Meat producers and milk producers as well will have to bend over backwards to raise the EU hygiene standards. This involves a great deal of investments and has only two alternatives transformation into traditional producers or closedown of the businesses. Traditional producers however, will only have access to a narrow local market. “Aligning with the EU standards requires a lot of money. Additionally, Europeans benefit from subsidies and export premiums, while we do not get anything,” said Mihai Daschievici, manager at Avicola Babeni, an enterprise dealing with poultry products.

Demand outpaces supply in real estate market

Although more and more buildings are being built in Romania, the demand at national level still outpaces supply, the Adevarul daily reported on August 30.

One million more flats should be built, which is hard to do soon, as in a bumper year like 2004, houses were built for 30,100 families only. The real estate crisis could be caused by ‘’the preference of investors for the luxury segment,’’ the daily says.

A solution analysts think of would be the development of big residential projects, with prices no higher than 45,000-60,000 euros per dwelling.

Average prices now stand at some 100,000-200,00 euros per flat, the Bursa reports. Romanian investors can make investments on foreign markets

“Europe Bonds” is the first investment fund in Romania, making investments on foreign capital markets, offering the Romanian investors the opportunity to access such markets, daily Bursa reports.

The fund also targets investments in government bonds issued by EU member states. The fund administrator is “CA IB Asset Management”, Bursa informs.

“Europe Bonds” fund is mainly aimed at investors who want to preserve the invested capital against a reduced volatility background. With the investment policy oriented towards instruments denominated in euro, the fund addresses investors who want to avoid the risk of domestic currency depreciation against the single currency. The fund unit is denominated in euro and is both in euros and lei terms. The initial value of a fund unit is 10 euros, or its equivalent in lei. The minimal initial investment is equal to the equivalent of 300 euros.

The fund owns over 70 percent of the bonds guaranteed by states such as France, Austria, Germany, the Netherlands, Belgium, Greece, Poland, Lithuania, Slovakia and Hungary. The remainder is invested on the Romanian market, in bonds issued by the Romanian state and in bank deposits.

Low-cost airlines - wind beneath market’s wings

Only 30 percent as many Romanians travel by plane as in other countries. Three low-cost airlines are currently splitting the Romanian market: Blue Air from Bucharest, Carpatair of Timisoara, and the Italian My Air, Business Review informs.

EU accession is expected to boost this market, as many other low-cost carriers will want to tap into its potential. From September, Baneasa Bucharest International Airport (BBIA) will be the only hub used by these companies in the capital.

Blue Air is the latest low-cost airline to enter the market. Operating from December 2004, it is 100 percent Romanian, owned by local businessman Nelu Iordache. The airline runs flies to and from Bucharest, Barcelona, Istanbul, Maastricht, Lyon, Madrid, Milan and Rome. It has a fleet of two leased aircraft from an international company, Boeing 737s, with a capacity of 144 each. More than 500 Romanian and international travel agencies have signed contracts with the company to sell tickets.

“We have invested a lot in our marketing strategy. With pre-opening publicity and marketing since we’ve been operational, we’ve put in about 350,000 - 400,000 euros so far,” Business Review quotes Blue Air’s general manager Gheorghe Racaru as saying. Racaru has more than 30 years’ experience in the field of Romanian aviation, including nine as the general manager of national air carrier Tarom.

Blue Air has recently opened presentation and sales offices in Plaza Romania, the Unirii area and BBIA. The most recent, in Plaza Romania, required an initial investment of about 5,000 euros. These offices were initially intended to be presentation points, but many tickets have also been sold at the locations. One or two more are set to be opened shortly.

The airline, like any other low-cost carrier, sells tickets mainly over the Internet, by e-commerce. Low-cost airlines use this system to cut down on overheads and undercut their traditional rivals.

Ticket prices start at 19 euros plus taxes and go up to 280 euros plus taxes for a return trip. Italy, with daily flights to Rome and three per week to Milan, is the most popular destination, followed by Spain. “The majority of our clients are individuals who previously travelled by other means of transport, or did not travel at all because they couldn’t afford to,” Business Review quotes Racaru as saying.

The airline started to offer internal flights, but had to give them up because the flight schedule overlapped with the international one. It is considering introducing two smaller planes of 50 seats, to operate internal and regional flights to destinations such as Kiev, Chisinau and Belgrade.

“External flights are much more profitable, but the internal market has a great deal of potential due to business travel in Romania, which represents more than 90 percent of Tarom’s internal flight passengers. The state of the roads and trains are another reason why this area could grow,” said Racaru.

Turning to the issue of price, he added, “The difference between our tariffs and those of the regular carriers comes from the logistics of the airline.” Costs are also reduced through the booking or sales system.

“The price differential between the services offered on board is not big, but the real reduction comes from the logistics you need in order to provide such services as hot meals. The low tariffs we offer do not influence safety in any way. Smaller firms are more strictly supervised by the authorities regarding safety and maintenance measures. An airline’s reputation depends on its flight safety,” Racaru added.

With upcoming EU accession, the Romanian market is facing an unpredictable future. “Competition will appear when the bilateral agreements between Romania and European countries disappear and the ‘open sky’ policy is applied, after Romania’s accession. I’m sure that at that point many low-cost carriers will invade Romania to exploit the potential of the market,” said Racaru. The barriers that regulate air traffic will disappear with EU membership, when a new kind of global agreement is applied. Trafficking rights will no longer be required and the only remaining concerns will be the agreements between the airlines and airports. EU membership brings higher standards of living, artificially or not, with wage hikes of 30 to 40 percent expected. An average family will be able to put some of the extra cash aside for a plane ticket, said Racaru.

Media sources have reported that two other low-cost airlines will enter the Romanian market this year. Meridiana is an Italian company that will operate flights from Bucharest to Florence and Verona. Also touted to start up activities here is Wizz Air, which currently operates in Poland, Hungary and Great Britain.

Racaru stressed that the reports were only rumours and added that he thought the moves would be possible after 2007. “The aviation business is extremely expensive and requires a long-term investment, with more than a year or a year and a half to pay it off. We are also lacking in aviation specialists with the necessary courage to do this or to give good advice to someone tempted to start such a business,” he said. “In the Romanian business environment very few people get involved in businesses with such increased risks as aviation. They prefer IT, insurance or the service industry.”

Currently Blue Air has a market share of around five percent, according to its own estimates, and expects to increase the figure to seven percent by September. “We expect to have around 18 million euros in turnover for 2005, with an 11 million-euro turnover for H1. We are not in the black yet - from the operational and logistical point of view we need more than a year to reach that point. Aviation is costly - to borrow a plane you need a security deposit which decreases in inverse proportion to the number of planes you have. Being a new company on the market about $2 million is blocked in the warehouse rental and maintenance of the planes,” Business Review quotes

Racaru as saying. Blue Air has started to make an operating profit in the last few months, but the overall investment has not yet been amortised.

In the future the airline intends to consolidate the destinations where it currently operates through laying on more frequent flights. The next step is to start up new routes, destinations with increased marketing potential, and afterwards to consolidate them. Any new destination requires a long-term investment, because a flight to a single place becomes profitable and covers the initial investment after at least six to seven months, depending on the marketing possibilities.

“We are not ruling out a collaboration with other companies as long as both sides have something to gain from it. We are not ruling out a merger or even a takeover by another company, provided that the owner is willing to take on the necessary risks to maintain the name of the company and the 100 percent Romanian capital,” said the GM.

Gov’t launches Mangalia Shipyard tender

The Ministry of Economy and Trade will organise a tender to sell a 100 percent stake in Mangalia Shipyard. The starting price for all the shares was set at around 3.5 million euros (some 12.7 million RON).

The tender will be held on October 3 and potential investors should submit papers by September 26, and bidders must meet several criteria, to pre-qualify.

The investing company has to show it posted a turnover of some 4 million euros in 2004. If it is part of a consortium, it should provide evidence its turnover was at least 5 million euros, last year. All the companies that submit their documents must produce a proven track record in the shipbuilding and repairing industry or related fields, such as machine building or metallurgy.

Potential buyers also have to submit a business plan for the next five years, through which they should agree on upgrading and development investments worth 3.5 million euros.

Of this sum, around 2.5 million euros should be spent in the first year after privatisation, while the remainder should be invested within no more than three years.

The buyer must also promise to invest minimum 500,000 euros into environmental projects. Apart from the investments’ value, the company to take over the shipyard has to put some 500,000 euros into the operational capital.

The money should be transferred to the shipyard’s accounts no later than three months after the privatization.

Office rent fees in Bucharest, some of Europe’s lowest

With all the impressive office buildings springing up in Bucharest City overnight and the abundance of office spaces in the central areas of the city, real estate surveys indicate that the capital city of Romania is still facing an acute shortage of office spaces, daily Curentul reports.

On the other hand, office rent fees in Bucharest are among the lowest in Central and Eastern Europe, according to the findings of a recent survey conducted by CB Richard Ellis (CBRE).

The survey show office rent fees are 18 euros per square metre a month in Bucharest, smaller only in Sofia, where they are 16 euros per square metre a month. By comparison, one square metre of office space costs 20 euros a month to let in Warsaw, and it exceeds 41 euros in Moscow. The office space stock in Bucharest City is approximately 700,000 square metres, while in Sofia it is only 500,000 square metres, in Warsaw 2.3 million and in Moscow 4.9 million.

The CBE report also indicates that Romania was the country in Central and Eastern Europe where the return on real estate investment rates were the highest in the first part of 2005 (10 percent), compared with 7.5 percent in the Czech republic and 7.75 percent in Hungary and Poland. The newspaper also informs that another impressive office building will be commissioned in Bucharest in three months. This refers to the Bucharest Corporate Center, located in downtown Bucharest, near Victoriei Square. This will be a 14-storey complex of 18.180 square metres of office areas, approximately 930 square metres of offices per storey.

European corridor 4 not to bypass Romania

European transport corridor 4 will not bypass Romania, as the alternative (European corridor 10 - Budapest - Belgrade - Nis - Sofia - Istanbul) opened as early as 1997, head of the Delegation of the European Commission to Bucharest, Jonathan Scheele, told Rompres on August 31.

‘’There is a corridor (in the area) which does not include Romania, corridor 10, opened in 1997, as for corridor 4, I don’t believe it can not include Romania,’’ Scheele said.

Scheele admitted that since the European Union finances the works of European corridor 4 (Nadlac Arad Deva Orastie Sebes Sibiu Ramnicu Valcea Pitesti Bucharest Fetesti -Constanta), its interest is to finalize them. According to Scheele, the EU did not finance the Brasov - Bors motorway project, as that project did not observe the EU regulations on public acquisitions. ‘’We cannot support a project that does not observe the public tender rules in the Union,’’ said the head of the Delegation of the European Commission to Bucharest.

Attending the signing of five new contracts the EU offers money for, related to the building of road and railway corridor 4, Scheele said that Romania must not build motorways where they are not necessary.

Scheele believes the programme of finalization of corridor 4 in 2010-2011 can be followed, as the EU gives the necessary funds through its bodies.

‘’Through the European Commission, that has financially supported the building of road and railway corridor 4, the works between Bucharest and Constanta ended, and we shall continue to cooperate also for the corridor’s other stretches,’’ said Romanian Transport Minister, Gheorghe Dobre.

According to him, the feasibility studies will be made and the documentation necessary for tenders for corridor 4 will be provided with support from the EU.

Drajna-Fetesti section of Sun Motorway to go live next year

A new section of the Sun Motorway connecting Drajna to Fetesti will be commissioned in 2006 and the Romanian Government will focus on works on pan-European Corridor IV, daily Ziarul financiar quotes PM Calin Popescu Tariceanu as saying at the Summer School of the National Liberal Youth on August 29.

The 46-km Drajna-Fetesti section of the Bucharest- Constanta Sun Motorway, which would ease road access to the Black Sea coast, is expected to come into use in 2006, the paper further quotes PM Tariceanu as saying.

Works on the Bucharest- Constanta Sun Motorway started in 1991 and the first three sections, connecting Bucharest to Fundulea, Fundulea to Lehliu and Lehliu to Drajna (105 km in all) were finished in 2004.

The Government allocated funds for the Brasov -Bors Motorway in 2005, and, depending on the finalisation of the feasibility studies and the financing agreements, the Government will finish works on Corridor IV in 2006, also investing in the Brasov-Bors Motorway, Budget resources permitting, Tariceanu said in his speech to the young Liberals.

Romania’s leasing market exceeds 1 billion euros in H 1 2005

The value of lease contracts concluded in Romania in the first half of 2005 exceeded the 1-billion-euro mark and their value is expected to exceed 2 billion euros throughout the year, daily Ziarul financiar quoted Chairman of the Association of Romanian Lease Companies (ASLR) Cornel Coca Constantinescu as saying on September 1.

According to data with ASLR, the total value of lease contracts in H 1, 2005, was 1.09 billion euros, up over 30 percent from H 1, 2004.

Some important players of the Romanian car leasing market, including Porsche Leasing, BCR Leasing and Motoractive have announced having upgraded their estimates of the 2005 contract volume.

The Romanian leasing market was estimated at 1.4-1.5 million euros (representing the value of the purchased goods) or 1.8-1.9 billion euros (including the value of the lease contracts, which comprises costs related to the lease, VAT excluded, plus the price of the leased goods, fees excluded).

The same as in the previous years, automobiles made up the bulk of the goods bought under a lease contract.

Baghdad authorities to be more open towards Romania on economic issues

Romania’s decision to write off 80 percent of Iraq’s debts will stimulate the Baghdad authorities to be more open towards Romania, said the Iraqi ambassador in Romania Adel Murad.

“Romania is the first state outside the Paris Club who took the important decision of writing off 80 percent of Iraq’s debts, and this decision stimulates the Baghdad authorities to be more open towards Romania,” Adel Murad told Rompres.

Iraq’s debts towards Romania amount to 2.7 billion dollars plus interest. “As for the remaining debt, Iraq will open the doors for the Romanian companies to put into operation the Iraqi oil machine. There are also agreements concluded on armament purchase and military staff training,” Murad said. He reminded that Romania and Iraq have had close relations in the economic, infrastructure, construction and military fields. Petromservice and Upet are two of the main Romanian companies currently operating in Iraq.

“A week ago, another Romanian company obtained the specifications for operation in a new oil field, in Tak Tak region, a camp located in the Iraqi Kurdistan, a zone that hasn’t been yet explored,” the Iraqi official mentioned, with the probability that the Romanian company might obtain this contract.

Iraq has recently signed a contract with Tractorul Brasov for the acquisition of 100 tractors.

II. ROMANIAN COMPANIES

The State Assets Realization Authority (AVAS) put up for privatisation, through the accelerated method, 492,971 shares, accounting for more than 50 percent of the Menaron Galati share capital, AVAS told Rompres in a release on August 29.

The accelerated method involves the sell-off of shares by auction, ten days after the sell-off bid is published.

The share capital of the company, dealing with constructions and naval repairs, is 2.4 million lei, with Dutch Shipparts B.V. (39.77 percent), Broadhurst LTD (0.62 percent) and several individuals (9.6 percent) as main shareholders.

All who are interested to participate in the auction, held on September 22, 12 am at AVAS headquarters, must present the participation notice and buy the presentation file, available as of August 31.

The potential buyers will present the mentioned documents in the presentation file, in sealed envelope, at AVAS headquarters, one day before the announced auction by the latest. The offer price is 0.5 lei per share, while the value of the whole stake is 246,485 lei.

The envelopes will be opened in the presence of all participants on September 21, 1pm. The verification and the analysis of documents necessary for the participation in the auction will be performed by September 22, 11 am, when the list with short-listed bidders is drawn up and given out.

AVAS recoups 16 billion old lei in overdue debts to Distrigaz and Electrica

The State Assets Realisation Authority (AVAS) has reported having recouped 16 billion old lei in overdue debts to Distrigaz and Electrica by freezing debtors’ accounts in the week that ended on August 28.

Some of the commercial companies in question had money withheld from their accounts for paying the debts, while others paid off part of the debts and are to pay the remaining debts according to a rescheduling calendar.

AVAS says it will continue to take firm measures to retrieve the debts entirely.

“The accounts will stay frozen until the debts are retrieved in full. Those who do not understand that these debts have to be paid should learn that AVAS may resort to forced debt repayment, including selling off assets or companies entirely,” says AVAS Chairman Gabriel Zbircea.

On August 17, 2005, AVAS froze the bank accounts of 1.094 debtors to the Distrigaz Nord and Distrigaz Sud gas distribution companies as well as to Electrica Banat, Electrica Dobrogea, Electrica Moldova and Electrica Oltenia electricity distribution companies.

Ministry of Communications and IT receives 12 consultancy bids for sale of RomTelecom shares

The Ministry of Communication and Information Technology (MCTI) received 12 letters of intent from internationally reputed investment banks, willing to provide consulting services in relation to the sale of the state shareholding in RomTelecom.

ABN AMRO, BNP Paribas, the consortium consisting of Deutsche Bank and BRD Securities, CA IB, Citibank, Credit Suisse First Boston, the consortium comprising HSBC and BCR, JP Morgan, Lazard & Co., Merrill Lynch, Morgan Stanley, as well as the consortium consisting of USB, ING and

CET, are all interested in this process, according to a MCTI press release.

Following an evaluation of the letters of intent, candidates will be informed about pre-qualification results, and shortlisted companies will be invited to take possession of the inquiry for offer. The sell-off of the state stake, accounting for 45.99 percent of the company capital, is expected to translate into initial public calls on foreign markets, addressed to institutional investors, an operation accompanied by flotation on international stock exchanges and on Bucharest Stock Exchange. Greek telecommunication group OTE has had 54.01 percent of RomTelecom shares since 2003. Romcarbon’s profit skyrockets by 520 percent in H1

Romcarbon Buzau (eastern Romania) ended the first half of the year with a profit higher by 520 percent as against the level registered at the beginning of the year.

The gross profit of Romcarbon soared by 534 percent as against June 30 2004. Referring to these figures, Romcarbon’s officials told daily Bursa: ‘’The profit did not increase only because of exploitation activities, but also due to activities additional to output activities, more exactly from the sell-off of tangible assets. We’ve implemented a space rearrangement strategy in order to avoid entering the works. We’ve collected the equipment in the same building and farmed out the transport activity and the activity of the lead mechanic. It seems the decision was good since they posted profit and signed new contracts.’’

The plant’s representatives also aim to become the only domestic manufacturers of expandable polystyrene used for the manufacture of all sorts of plastic bowls in the sector of filters where the plant is a market leader. The old installations will be replaced with new ones.

The company’s overall assets exceeded by 28 percent the sum registered on June 30, 2004. Similar expenses were higher by 19 percent as against last year.

Romcarbon Buzau produces foils, small and big bags, covers, injection and sintering products, pipes, tubes, couplings, capsules, foils, conductors and PE/PVC insulated cables, air filters, oil filters, fuel filters, safety parts, active carbon, foils. Romcarbon’s main shareholders are Unital International Corp with a 12.56 percent stake, SIF Transilvania with a 30.69 percent stake and Living Plastic Industry SA with a 38.03 percent stake.

GTC Poland to raise stake in GTC Romania

GTC Poland, a company owned by Israeli group Kardan, will raise its stake in GTC Romanit to 66.03 percent by the takeover of a stake from a subsidiary of Deutsche Bank, Ziarul Financiar daily quoted Kardan as saying on August 29.

GTC Romania was the property developer of Bucharest-based office building Europe House, which was then sold to mobile telephony operator Orange for some $30 million, as well as of American House development.

In Romania, Kardan has just sold its insurance business Omniasig to Austrian group Wiener Stadtische to focus on the real estate market. According to the said source, GTC Poland will buy into the subsidiaries of Romania, Hungary and Serbia for an overall $7.8 million. GTC Poland will purchase a 10-11-percent stake in each company. The deals will be struck in September 2005, while GTC Poland’s stake in the Romania-based subsidiary will be raised to 73.77 percent in the first quarter of 2006.

This year, GTC Romania will complete the American House building put at 50 million euros and announced its intention to start off other developments worth an overall 200 million euros

According to estimates, the Romanian real estate market has drawn over three billion euros in investors’ funds so far, the market’s trump card being the higher-than-usual return on investment. Pipe-maker Mittal Steel Roman posts profit in H1

Mittal Steel pipe-maker (former Ispat Petrotub) posted profit in the first half of the year, given that the company posted at end-June a net profit worth 4.6 million euros (16.9 million lei), daily Ziarul Financiar reported on August 29.

In the same period last year, the company registered a loss worth over 3.7 million euros (15.2 million lei).

Roman-based (northern Romania) Mittal Steel’s switch to profit was followed by doubling in sales and the turnover registered by the company in H1 amounted to 107.1 million euros.

Over January-June 2004, the pipe manufacturer posted a turnover worth 47.2 million euros. Later last year the company managed to reduce losses by over 90 percent up to the level of 0.3 million euros, concurrently with the 76 percent growth in turnover up to 126.6 million euros. The positive results announced by the company were the outcome of the intensification in the activity as the whole steel industry was boosted due to the rising demand coming from Asian markets.

The company is part of Mittal Steel, the world’s largest steel producer, which also holds in Romania a steel plant in Galati (former Sidex, eastern Romania), pipe maker Tepro Iasi (eastern country) and Siderurgica Hunedoara (western Romania) producer of continuous cast billets.

At present, Mittal Steel owns a 69.7 percent stake in the company with the most important minority shareholder being financial investment company SIF Moldova with a 17.4 percent stake. Mittal Steel Roman’s shares are listed on Rasdaq e-stock exchange. The company’s market stock capitalization stands at about 15.7 million euros.

Foria Romania to invest 10 million euros in forestry services

Foria company of Sibiu, a forestry service supplier owned by Austrian company Foria Forestmanagement GmbH, has announced it will invest 10 million euros in services until 2010.

According to daily Ziarul financiar, Floria Romania Country Manager Alexandru Florea says the investment projects carried out by the company in 2004 stood at around 971,000 euros and were mainly devised for developing the wood exploitation and transport capabilities of the companies. Investment is set at 1.1 million euros in 2005. The funds will be mainly channeled into acquiring new equipment for building logging roads, the introduction of new environmental-friendly wood processing equipment as well as into increasing the motor transport capacities to manage wood trade, and the establishment of forest administration units.

Foria Romania officials are eying a 2005 business turnover of 5.8 million euros, up from 3.5 million euros in 2004. The turnover is projected to touch 10 million euros in 2007.

Foria Romania is exporting only beech wood and the company’s strategy provides for producing and trading the wood in Romania. The company was established in 2003, providing a wide range of forestry services, from wood trade to the building of logging roads and forest management.

Foria Romania is the first company set up by Austria’s ForiaOBf GmbH as part of its business expansion to Eastern Europe.

Romanian trucks meet European standards

Company Roman Brasov (north of Bucharest) makes EU-compliant trucks that Romanian companies can buy for a price nearly 15 percent lower than similar goods on foreign markets, Saptamana Financiara weekly reports.

Relying on German know-how and German and west European parts, Roman Brasov manufactures trucks for several segments such as construction, goods and oil transport, forestry and oil. Such series trucks first came onto the market in 2005.

Whereas the company made 190 units in 2003 with 7,500 employees on the payroll and 780 billion lei in turnover, it hit the mark of 400 units in 2004 after the laid-off employees were hired again and posted 1,000 billion lei in turnover. In 2005, after series trucks came churning out, the Roman Brasov plant is shooting for 1,000 trucks.

The new vehicles have brand-new upgraded bodywork, made in cooperation with a Brasov-based specialized company, while the dashboard has been replaced, according to a design created with 3D programmes by a Turkish company. The new trucks are equipped with various-thrust MAN engines. The gearbox and the brake system are made in Germany and Austria, while the wiring uses HELLA, AMP and Deutsch parts.

Under the contract won by tender with the US Department of Defense, Roman Brasov delivers to Iraq’s civilian ministries trucks for the fire brigades, dumping trucks and articulated lorries. Orders have been placed for 45 units bound for Iraq, of which 22 have already been filled.

Pandora bets two more million euros on clothing in fight against leu’s depreciation Pandora company of Focsani (eastern Romania) specializing in the production of women’s clothing, has invested over two million euros this year in order to streamline the activity of the two plants based in Tecuci and Focsani, given the losses generated by the depreciation of the European currency, daily Ziarul Financiar reported on August 30.

Whereas many of the companies operating in textile industry are forced to fire employees and cut investments because of losses prompted by leu’s appreciation, Pandora company increases not only production facilities but also the number of employees.

Company’s general manager Doru Simiz claims that the chances of success of a manufacturer are related to the investments in the products and to the approach to the Romanian market with own brand.

Last year Pandora purchased a 4,000-sq.m.building in the town of Tecuci where it transferred a part of the production of the Focsani-based plant. After the completion of this investment, the company’s monthly production capacity reached 140,000 items.

This year the company estimates a turnover worth 12 million euros, up 11 percent as against 2004.

The company is working under forward processing system and its portfolio of customers includes companies such as Hennes&Mauritz, Marks&Spencer, Next, Etam, Stradivarius or La Redoute.

Early next year, Pandora is to release its own collection (sport and office clothing). Pandora company was set up in 1994 in Focsani and started its activity with 30 employees and about 5,000 clothing items a month. Last year, the company employed 1,500 people, posted 10 million euros in turnover and had a production capacity of 140,000 items a month.

Burda takes over Casa Lux publishing group

German publishing group Burda has taken over local publishing house Casa Lux in a move that is expected to change the landscape of the local print market, weekly Business Review reports.

The value of the transaction has not been disclosed.

By taking over Casa Lux, Burda is adding to its portfolio Practic in Bucatarie, the widest read publication according to the National Readership Study, SNA, and five other titles.

Burda, which will actually take over the Romanian publishing house’s magazines at the end of the year, is consolidating its position and becoming the fourth largest publishing group in terms of readership.

Referring to the 6- 8-million-euro value of the deal estimated in the media, Michael Schroeder, general manager of Burda Romania, told Business Review: “It’s not a figure coming from us. We have agreed not to disclose the value of the transaction.”

He added that management had decided to keep the two companies separate for now. “Next year we will analyze everything but for the time being we don’t want to mix anything.”

The name of Mariana Braescu - the founder and until last week only owner of Casa Lux - will be kept in the masthead of the magazines as a founding director. Other titles the German group is taking over are Casa Lux, Casa de vacanta, Practic - Idei, Draga mea, Carticia Draga mea pentru copii and Carticica Practic.

“I think the print market will consolidate and expand as consumption and advertising expenditure rise. I foresee a highly positive trend for the next three to five years. But the distribution market needs consolidation and professionalism,” said Schroeder. “We have a lot of respect for Ms. Braescu and Casa Lux. It’s a true success story in Eastern European publishing because she did everything by herself.”

Burda, for which Schroeder estimates a 2005 turnover of 3 million euros, has in Romania Ioana, Burda, Cool Girl, Gradina Mea De Vis, O Viata Frumoasa Cu Plante Si Flori, Locuinta Mea, Secretele Bucatariei, Ioana Horoscop, Ioana Copilul Meu, Auto Special Catalog and Frizuri. It launched earlier this year the first glossy in its portfolio - the Romanian edition of Men’s Health. La Festa continues to invest in Romania

LA Festa International of Valenii de Munte (Prahova southern county), a juice producer, is carrying out an investment plan of 5 million euros, daily Bursa reported on August 31.

A large storage facility, built and equipped according to EU norms, came recently into operation, and will be followed by a production line with equipment worth of 1.5 million euros. Ten new products will be launched by the end of the year, added to the recently promoted Fantasy series.

The company invests mainly for the local market, says President Krzysztof Grabowski. The exports are on the increase, due to the performance standards observed. Some 17 percent of the output was exported to Germany, Poland, the Czech Republic, Hungary, Slovakia, Bulgaria, Turkey, Jordan and Lebanon. The exports reported a 21 percent rise in 2005 on the existent contracts.

The company was established in 1996 by Maspex Group of Poland, and has a computerised production line in Valenii de Munte. The production process started in 2002 following a 20 million euro investment, finalised in 2004.

With two production lines, the factory produces the Tedi, Carotella and Ciao natural juices, the Tymbark nectar, the Duo-Fruo cooling drink, the La Festa hot chocolate and cappuccino as well as granulated tea and coffee.

La Festa International reported a 30 million euro turnover in 2004 and expects 40 million euros for this year.

Private operators competing with CFR Marfa

Competition from private companies has strengthened the CFR Marfa public railroad freight transport corporation and prepared it for competition with European transport companies after Romania’s accession to the European Union, weekly Saptamana Financiara reported.

According to the publication, 30 private operators have so far been issued licences to do business. “Not all these operators are active, but the top eight of them are strong, currently holding a share in the transport market of between 10 and 15 percent, directly competing with CFR Marfa,” says an official of the Transport Minister. He says that CFR Marfa will have to cope with tough competition from much stronger operators when Romania has entered the EU, but the company has certain training on the local market.

The market for freight railroad transportation was liberalised in 1998, after which the Government ceased to step in to set prices for railroad freight transport.

In order to avoid the closure of by-lines generating small profits or operated at a loss, 2,400 km of such lines were put up for tender, with 850 km of them being taken over by private operators, the publication informs.

Romania’s railroad network is 11,400 km long, and the CFR public operator is unable to cover the costs entailed by the upkeep and modernisation of the network.

CFR derives approximately 2 percent of its business turnover from freight transport and 8-9 percent from passenger transport, which is performed on 3,000 km of the entire network.

Alro increases share capital by 141 million RON

Aluminum maker Alro Slatina (Bucharest Stock Exchange: ALR) has ended the process entailing a share capital increase by 141.252 million RON.

The company has at present a share capital worth 352.397 million RON as against 211.144 million RON before, Alro informs.

Following this process, the shareholders’ structure did not change significantly. Marco Industries holds an 85 percent stake (with a subscribed sum worth 139.808 million RON), the State Assets Realization Authority holds 10 percent, Conef owns a 3.2 percent stake and other minority shareholders hold a 1.14 percent stake altogether.

‘’Minority shareholders too have contributed to the share capital increase. This proves that they trust the company and its management,’’ said vice-chairman of Alro Slatina board of directors Marian Nastase.

The sums resulted from the increase in share capital are bound for the company’s development plans. For 2005 Alro’s investment budget exceeds $25 million and will mainly focus on the development of capacities for products with high added value and on environment protection.

Alro signed a contract for the purchase of a Wagstaff installation designed to produce aluminum cover plates. The projects’ overall value exceeds $5 million.

Aldis SRL of Calarasi to start investment in production line for dried moldy salami Aldis SRL charcuterie maker of Calarasi will start an investment project of 7-8 million euros for commissioning a production line for dried moldy salamis, Aldis General Manager George Naghi informed on August 31.

“We are expecting the project to be carried through in 2006,” Naghi said, mentioning that EU Sapard financial grants might be used for the project. The new production line would cover 3,500 sq.m and put out 5-6 tonnes of products a day.

Aldis has invested over the past five years 25 million euros, 3 million of which were provided in the first part of 2005.

“The investment funds have been mainly channeled into upgrading the charcuterie factory and the slaughterhouse and equipping them with state-of-the art technology, as well as in establishing the company’s own quality system.

Aldi SRL is currently holding an 18.7 percent share in the Romanian charcuterie market. Its main competitors are Cristim, Angst, Caroli and Campofrio.

Aldis has reported an H 1 2005 gross profit of 10 billion lei, on a business turnover of 22.2 million euros.

The company started up in 1991 with a small factory for the production of a narrow range of meat products, which it traded at its own shops in Calarasi and the surroundings. It currently has 700 workers on the payroll. Owners of Aldis are George and Alina Naghi.

Orange Romania starts works on new headquarters in Cluj-Napoca

Orange Romania mobile phone operator has announced having started an investment project worth 20 million euros for building new headquarters for the company in Cluj-Napoca, daily Ziarul financiar informed on September 1.

The decision to construct new offices for the company is based on the need to increase the capacity of the Orange network in the west-central province of Transylvania, says Orange Site Production Group Manager Horia Vintan.

Ever since the re-branding process undergone three years ago, Orange has considerably invested in Transylvania, both in the technical network and in the distribution network. Over $1.5 million was invested in expanding the chain of its own shops. In 2004 alone, over $42 million was invested in the development of the technical network, says Vintan. According to him, the investment plans of Orange Romania read over $200 million, which will be channelled mainly into developing new technologies, products and services as well as in network expansion.

Since 1997, the company has invested over $1 billion in Romania, both under its current and its former name.

In 2005, the customer base of Orange Romania exceeded the 6-million mark. The company’s officials expect a rise of 33 percent in the company’s turnover, to 1,030 million euros, and of 28 percent in its customer base.

Ecopack Ghimbav reports H 1 2005 profit of 700,000 euros

Ecopack cardboard manufacturer of Ghimbav has reported an H 1 2005 net profit of 2.6 million new lei (some 700,000 euros), daily Bursa informs.

According to the paper, the operating profit of the company was 3.4 million new lei (about 970,000 euros), from which financial losses were deducted.

Ecopack’s turnover advanced 6 percent year on year, mostly on sales of end products, which totalled 22.9 million new lei (roughly 6.5 million euros).

The paper mentions that the increase in the company’s output was the result of attracting new customers for corrugated cardboard sheets.

Ecopack Ghimbav produces and trades corrugated cardboard sheets and packaging. It was established in 1921. In 1957, it manufactured the first batch of corrugated cardboard in Romania. In 1970 it was retooled with French equipment, while in 1997 it turned private.

Significant shareholders in Ecopack are Kameran Financial Aktiengesellschaft (82.66 percent) and the Banat-Crisana financial investment company (13.03 percent). The company is in turn a shareholder in Ecopaper, Repap and Celhart Donaris, all operating in the pulp and paper industry. RomTelecom H1 net revenue up five times reaching 103.7 million euros

Romanian telecommunications operator RomTelecom, part of OTE Greek consortium, reported 103.7 million euros in net revenue by mid-2005, respectively a fivefold surge in profits as compared to the same period of 2004, reads an OTE online consolidated statement of operations.

In the second quarter of the this year, RomTelecom achieved a significant improvement in profitability, posting net income of 57.6 million euros, resulting in net profit margin of 24.8 percent, compared to 4.7 percent in the second quarter of 2004. Furthermore, in the second quarter of 2005, RomTelecom posted revenues of 232.4 million euros, up 16.4 percent as compared to Q2 2004, the increase primarily being due to positive evolution of rental, interconnection and leased

lines and data services, company data also reveal. In a six months time frame, the company’s revenues went up by 14.3 percent, from 400.8 million euros in H1 2004 to 458.1 million euros in H1 2005.

As for the wholesale revenues, the upward trend characterising the Romanian telecommunications market has been directly reflected in Q2’s 21 percent surge, also showing a 56 percent gain in wholesale traffic. By contrast, retail traffic decreased in comparison to the second quarter of 2004 due to mobile substitution and heightened competition from alternative carriers. Conversely, tariff rebalancing resulted in an increase in international traffic for residential customers. CosmoRom’s operating revenues in the second quarter of 2005 amounted to 1.6 million euros, while net losses amounted to three million euros. In early July, Cosmote acquired a 70 percent interest in CosmoRom through a 120 million-euro equity injection in the mobile operator, while Romtelecom still holds a 30 percent minority stake.

Rompetrol unveils business expansion programme worth $40 million

Rompetrol Group, the second biggest player in the Romanian oil market, on September 1 opened in Timisoara the first petrol station in a series of 36 such shops to be developed in 2005 nationwide, daily Ziarul financiar reports.

The project is part of an 18-month business expansion programme worth $40 million.

The new stations will bear the name of Rompetrol and will include shops, restaurants and Internet cafes.

Rompetrol Group, run by businessman Dinu Patriciu, has reported an H 1 2005 turnover in excess of $1 billion, up 67 percent from H 1 2004. The group also recorded a net profit of $81 million, compared with losses of $12 million in H 1 2004.

Rompetrol is one of the main players in the petrol stations segment, where Petrom is currently the leader.

Pharmaceutical company Ozone doubles portfolio and sales in H1

Pharmaceuticals company Ozone Laboratories Romania doubled turnover in the first six months of this year, reaching 11 million euros, following the expansion of portfolio from 46 to over 100 drugs traded on the Romanian market, daily Ziarul Financiar reported on September 1.

The pharmaceutical market in Romania is extremely dynamic and keeps on rising, says Ozone’s general manager Dan Schiopu. The investment plan for 2005 exceeds 5 million euros. Of these funds, over 3 million euros will be used for the development of the products’ portfolio and their registration on the Romanian market and other seven markets from Central and Eastern Europe -Russia, Ukraine, Bulgaria, Poland, Hungary, the Czech Republic and Slovakia. The company expects sales worth 28 million euros for 2005.

The company plans to extend its portfolio this year up to 130 drugs, with emphasis on the range of antibiotics, products for gastric and cardiovascular diseases, nutritional supplements and pain suppressants.

Ozone drugs are produced by the company’s partners Mark International Iasi and Fabiol Bucharest. Last year’s investments put at 2 million euros focused on the inauguration of a new production facility and a new production line within the two companies.

British company Ozone Laboratories entered the Romanian pharmaceutical market in August 2001.

Vienna Capital Partners interested in Oltchim

Austrian Investment Fund Vienna Capital Partners is interested in purchasing the controlling interest in the petrochemical plant Oltchim Ramnicu Valcea, reads a release of Salans, the exclusive legal consultant of the Fund in Romania.

According to the legal office, the Fund sent a letter of intent for buying Oltchim to the Ministry of Economy and Commerce last autumn, the moment when the plant was put up for privatisation.

“Vienna Capital Partners has already informed the Romanian authorities about the interest in taking over Oltchim, which would offer us a chance to consolidate our presence in the region. As a strategic investor, we want to use our experience in the petrochemical industry to support the development of Oltchim plant,” stated Heinrich Pecina, Senior Partner within Vienna Capital Partners.

Vienna Capital Partners is one of the most important investment and consultancy groups present on the Eastern Europe markets, but also in Germany and Austria. In Central and Eastern Europe, Vienna Capitals Partners also holds the chemical plant in Borsodchem, Hungary, which it purchased in 2001. The investment fund firmly denies information in the press, according to which it would intend to purchase the Rafo Onesti refinery.

Tiriac Auto reports 280 million euros in business

„Tiriac Auto, the vehicles division of the group of companies businessman Ion Tiriac owes, posted 280 million euros in turnover January through July this year, and expects it to reach 470 million euros in the whole year, the dailies Ziarul Financiar and Bursa reported on September 2.

According to Tiriac Auto Executive Manager, Adriana Ichim, the company sold in the said period almost 9,000 vehicles, more than say the company’s estimates made early this year, which put the sales of 2005 at 15,000 units and the turnover at 430 million euros.

The turnover includes sales and servicing.

Tiriac Auto Group posted in 2004 as much as 320 million euros in consolidated turnover, and exceeded by 11 percent its sales plan of 10,000 units.

Tiriac Auto coordinates the activity of five vehicle importers in the local market, i.e. Auto Rom, M Car Trading, Romcar, Premium Auto and Hyundai Auto Romania and represents ten brands, namely Mercedes-Benz, Smart, Chrysler, Mitsubishi, Ford, Mazda, Jeep, Jaguar, Land Rover and Hyundai. Tiriac Auto’s main competitors when it comes to import are Porsche Auto, Renault, Nissan Romania, Trust Motors, Automobile Bavaria, each of them with business worth more than 100 million euros last year.

City Mall in southern Bucharest, a 30 million euro investment

The newest Bucharest-based shopping centre City Mall will be inaugurated this autumn and will provide modern services for the 700,000 inhabitants living in southern Bucharest, daily Bursa reported on September 2.

Seen by the architects and designers as the most elegant and spectacular mall of Bucharest, the new City Mall absorbed a 30 million euro investment and will create over 1,000 jobs. The complex spreads over a 38,000 square metre surface, including a 24,500 square metre commercial area and a 4,113 square metre terrace.

City Mall will be the only such centre in southern Bucharest. It will include elegant stores, coffee houses, Romanian, French, Italian and exotic restaurants, a large cinema hall and amusement services.

“Our company created a new brand for this investment, the City Mall brand. It is for the first time when a company, owner of a commercial centre, Jaguar Development, extends its marketing services. We managed to attract new brands among the City Mall retailers, compared to other locations in the country,” says Regatta Real Estate Company director Eduard Uzunov.

Jaguar Development plans for 2006 real estate investments worth of 50 million euros, planning to construct residential buildings and offices in northern and southern Bucharest.

The company owns in Bucharest the PGV Tower, the Nord Business Centre, the Strauss BC, the Puccini and the Dorobanti BC office buildings as well as several residential constructions.

Companies of Greece and Israel own the Jaguar Development in equal shares. Murfatlar Group to take over Global Spirits Ploiesti

The shareholders of Murfatlar Group, owners of Euroavipo Posta Calnau, producer of Unirea and Hanual Ars brands, took over one of the first five local alcohol producers, Global Spirits Ploiesti, owner of Bartender’s, a business developed by a Romanian entrepreneur, Gheorghe Iaciu, daily Ziarul Financiar informed on September 2.

Sources on the spirits market say that the transaction provides for commercial and budgetary debts of Global Spirits before the takeover of the controlling interest.

“I did it for the long-term benefit of the business. As I could not to continue by myself, I’m sure that the contribution of Euroavipo will help,” says Iaciu. He had previously told the paper that he had made a bad choice entering the alcohol industry, and therefore he was looking for a buyer for his business or for a company to merge.

This transaction is the first in a series that is expected to reshape the market and reduce the number of players. The importers are also undergoing changes, after Pernod Ricard took over Allied Domecq at international level, and Razvan Petrovici, owner of Univers’all supermarket chain, decided to sell the Diageo brands distribution to a group of foreign investors, the paper mentions. Euroavipo is the main client of pure alcohol for Global Spirits, the second largest producer of pure alcohol after European Drinks. Global Spirits reported last year 10 million euros in turnover, but derived only 3.2 million over the first half of this year. According to data with Minister of Public Finance, the company had a 14 million euro turnover in 2003 and total debts of 13 million euros. Electromagnetica Bucharest’s turnover grows by 58 percent

Electromagnetica Bucharest reported a turnover worth about 11.4 million euros in by mid-2005, on the rise by 58 percent on the same period last year, the Bursa daily reported on September 2. The operating income grew by 59 percent at the same time with a 51 percent rise in the expenditure and the losses dropped by 58 percent as compared to last year, the same daily reads. One of the cause of the rises in the running costs lies in an investment programme in plastics injection equipment and matrices, without, however, the new production capacities being completely covered by orders, the Company’s report says.

To improve the Company’s activity, the Board of directors decided to increase and diversify the production, to look for new outlets and get promptly the payments for the deliveries.

Electromagnetica Bucharest was founded in 1930 when it was named Standard Electrica Romana and put out the first phones and phone exchanges in Romania. It became a joint-stock company in 1990 and currently the Employees Association owns 54.18 percent of the shares, and SIF Oltenia holds 9.99 percent, reads the RASDAQ e-exchange.

III. TRADE

Romanian-Czech trade to exceed 800 million euros in 2005

Trade between Romania and the Czech republic is expected to exceed the 800-million-euro mark in 2005, following a 30 percent rise in the first six months of the year, commercial adviser with the Czech Embassy to Romania Karel Zdenovec told Rompres. He mentioned that the 2004 commercial exchanges between the two countries stood at 615.16 million euros.

“Czech-Romanian commercial exchanges touched 419.59 million in H 1, 2005, up 30 percent from 2004, while at end-June 2005 their value was bigger than the total 2002 figures and close to those of 2003,” said Zdenovec.

In connection with the problems facing foreign investors in Romania, Zdenovec mentioned corruption, the mishandling of bids and excessive red tape.

“I believe politicians in Romania should become more disassociated from the business decisions that lead to personal gains first of all,” Zdenovec mentioned.

He argued that entrepreneurship and business culture should also be improved and Romania should manage in as transparent a way as possible the subsidies coming to her as well as flabby infrastructures and services.

Czech companies in Romania are operating mainly in the energy and infrastructure fields as well as water and waste management and the rehabilitation of destroyed ecological areas.

“We will try to invest in the manufacturing of means of transportation and machine-tools, but we are mainly interested in the light industry, wood processing, the chemicals industry and automobiles. We will also attempt to provide our experience and know-how in added-value products and services, such as IT&C products and call centers,” Zdenovec also said.

Romania’s foreign trade advances in January to July 2005

Romania’s FOB exports in the first seven months of 2005 stood at 12.52 billion euros, up 15.2 percent from 2004, the National Statistics Institute reports.

Exports totalled 1.993 billion euros at end-July 2005, up 8.2 percent from end-July 2004. The value of trade recorded in July 2005 is the highest since 1990.

Romanian exports to the 25-strong European Union advanced 7.1 percent compared with the first seven months of 2004, with 68.6 percent of Romanian exports having been bound for the EU.

CIF imports in the first seven months touched 17.49 billion euros, up 21.8 percent from the similar period of 2004.

CIF imports in July 2005 totalled 2.546 billion euros, 16.2 percent over the figures of July 2004. Imports from the 25-strong EU increased by 17.7 percent year on year, accounting for 63 percent of Romania’s imports.

Romania’s trade deficit nears 5 billion euros over January - July 2005

Romania’s trade deficit in the first seven months of 2005 stood at 4.97 billion euros (3.62 billion in FOB prices), show data released by the National Statistics Institute (INS) on August 30.

The deficit was 765.8 million euros (553.4 million in FOB prices) in July 2005.

According to data released by the National Bank of Romania (BNR), the exchange rate of the local currency, the leu (RON), against the euro in July 2005 was RON 3.5237 to EUR 1, while one US dollar was trading at RON 2.9164.

Bucharest Stock Exchange to merge with Rasdaq e-stock exchange

The main goal of the merger between the Bucharest Stock Exchange with Rasdaq e-stock exchange is the strengthening of the Romanian market so that, concurrently with the flotation of large utility providers - the Bucharest Stock Exchange may become attractive for the competition of business deals from Central and Eastern Europe, daily Saptamana financiara reports.

Decided at mid-2004, the merger of the two stock exchanges was predicted for mid-2005 and will be completed until December 31, 2005, with the aim of attracting international customers.

According to the magazine, although the entire European market is aimed at, expected in Bucharest are particularly players from Central and Eastern Europe, who could be attracted by state-owned companies or state-majority companies operating in the utility field such as Transelectrica, branches Distrigaz or Electrica, Romtelecom or BCR.

The name of the company ensuing from the merger will be Bucharest Stock Exchange and the technical support of trading for all the shares on the market will be Arena.

The first step to the merger was the transformation of the Bucharest Stock Exchange from public institution into joint stock company in mid-June when the company was listed in the Trade Register. Stock in Sinterom Cluj back for trade on stock exchange

Shares in Sinterom manufacturer of metal products will be back for trade after four years of absence, daily Ziarul financiar reports, mentioning that trade in this stock resumed on the Rasdaq e-stock exchange on August 31.

The company was floated on the Bucharest Stock Exchange (BVB) before 2001.

The company was de-listed from BVB upon request after it turned private, says Sinterom Director General Leonte Maricel. According to the new regulations in force, the company had to start the procedures for being listed on Rasdaq.

Sinterom reported an H1 2005 business turnover of 11.41 million new lei (3.23 million euros), down 6.7 percent from H 1 2004. Its operating profit declined 14.4 percent to 1.66 million new lei at end-June 2005.

The net profit touched 1.08 million new lei (304,800 euros), down 7 percent from H 1 2004. Sinterom has a share capital of 12.1 million new lei (3.42 million euros).

The product portfolio of Sinterom is made up mainly of sintered ferrous and non-ferrous products (40 percent of the sales), followed by spark plugs, motor starters and ignition electrodes (37 percent of the sales). The company also produces wires of wolfram and molybdenum, ceramic products, electric switchers and magnets.

Romanian Skoda importer expects unit sales of 14,000 in 2005

Porsche Romania, the local importer of Skoda automobiles, has upgraded to 14,000 automobiles its 2005 unit sales projections.

The initial 8,000 unit sales figures were also upgraded in April, to 9,000-9,500.

According to the company’s managers, the upward trends in the sales volume is the result of an overall rising tendency of the Romanian automobile market, the developments in the single European currency and improvements in the local purchasing power.

Investment in the distribution network for Skoda automobiles stood at 18 million euros in 2004, and it is expected to reach 18-19 million euros in 2005.

Romanian stock market on increase again

After a lackluster period, the Romanian stock market had a positive evolution on August 30, daily Romania Libera informs.

Against the background of an average liquidity, above 14 million lei (1 euro = 3.5 lei), all Stock Exchange indexes ended the session on higher values as against the previous day.

The result, the paper mentions, reflected the market’s tendency, 34 transacted shares reporting growth from a total of 51. The market of financial investment companies had the best evolution, with BET-FI index on the highest increase, up 2.81 percent. The financial investment companies (SIF) traded some 9 million lei.

SIF Oltenia ranked first, followed by SIF Moldova and SIF Banat-Crisana. The SIF shares had 240 transfer operations on the main market and two special transactions. The total value of operations reached 3 million lei. Some 227 transfers were made for SIF, while the last transaction ended 4.29 percent higher than the previous session. The value of operations stood at 1.6 million lei. Brokers expecting BVB to fluctuate

Stockbrokers are expecting the Bucharest Stock Exchange (BVB) to vacillate in the days ahead, daily Averea reported on August 31.

According to the latest data, securities brokered by the Oltenia financial investment company (SIF) were the heaviest traded of late, while securities brokered by SIF Moldavia and SIF Banat-Crisana were the second and the third most sought after.

Rises were also reported in the shares in oil companies. SNP Petrom shares advanced 1.1 percent in price to 0.4530 new lei one, with 2.9 million such shares having been traded for 1.3 million new lei.

Shares in Rompetrol Rafinare advanced 3 percent, to 0.0965 apiece, having been traded for 1.1 million lei, in 11.5 million units.

Banca Transilvania and BRD ended trade on a slight rise, while Banca Carpatica advanced 3 percent, the furthest advancement of all the bank stocks traded on BVB.

Third of furniture lately bought by Romanians is imported

Romanians have begun to buy furniture from abroad, last year alone imports totalled about 150 million euros, namely a third of the domestic furniture consumption, daily Adevarul reported on September 1.

‘’The reason is explained by the fact that products brought from abroad have a modern design and shining metallic accessories,’’ executive president of the Association of Furniture Makers in Romania (APMR) Aurel Rizea told a news conference preceding the opening within a week of the 2005 BIFE-TIMB furniture fair.

More often than not, imported furniture is cheaper than the Romanian one, particularly the furniture imported from Poland. On the other hand, as many as 86 percent of the total of Romanian export of furniture goes to the European market, said Rizea.

Although low price is an important detail when such an investment is made, the Romanian buyers have started to develop different tastes. For this reason, Romanians prefer the furniture made in Italy, Germany and France, countries with tradition in the field. Usually they prefer the classical style and leather upholstery.

Trade between Romania and Croatia advances over 60pc in 2004

Trade between Romania and Croatia neared $259.5 million in 2004, up approximately 61 percent from 2003, and Croatia wants to further develop bilateral relations with Romania, says commercial adviser at Croatia’s Embassy in Bucharest Mario Martinovic.

“Bilateral trade between the two countries is on an upward trend, but I believe the co-operation potential between the two countries has not been sufficiently used and there is room for improvement,” Martinovic told Rompres.

Bilateral commercial exchanges between Romania and Croatia in the first five months of 2005 stood at $96.133 million, 55 million favouring Romania. Romanian exports were worth $70.46 million and Croatian imports to Romania were of $25.65 million.

“I think economic co-operation should strengthen, especially in the fields of energy, transport and infrastructures,” said Martinovic.

Since end-December 2004, there have been 82 Romanian-Croatian joint ventures running on a paid-up capital of $1.237 million, with Croatian investors being ranked 76th among foreign investors in Romania.

“We are interested in improving the existing business relations by generating co-operation conditions, particularly in the automobile industry, the shipbuilding industry, the manufacture of ship engines, as well as by including Croatia in a regional programme for electricity transfers, seeking new railroad freight and passenger transport routes and operating flights to connect Bucharest to Zagreb,” Martinovic also said.

Terapia Cluj reports sales of 33 million dollars in first half of 2005

Drug-maker Terapia Cluj-Napoca (north-east of Bucharest) posted some 33 million dollars (or 27 million euros) in turnover in the first half of 2005, which is 65 percent of the company’s total sales in 2004, the Ziarul Financiar daily reported on September 2.

The sales figure in the first half of the year is a result of the intensification of a marketing and promotion policy with the focus being on sales in both Romania and abroad, General Manager of Terapia Cluj, Stephen Stead, says.

Terapia has recently bought two pharmaceuticals firms, Pharmaplant and Promedic, both of them based in Bucharest. The two companies totaled together sales of over six million dollars, and their products only hit the domestic market.

The 60 products in the range of the two companies will add to that of the medicines producer in Cluj-Napoca, says Stephen Stead. So, Terapia’s sales are expected to grow in 2005 by some seven million dollars more than the rise in the estimates made early this year, which had said the turnover in 2005 will rise 25 percent from the 51.5 million dollars reported in 2004.

The company earmarked some six million euros for investment to be made in the second half of this year.

Terapia is owned by U.S. Advent International Fund, which bought in 2004 some 95 percent of the company’s shares, for 45 million dollars.

Stock Exchange on upward trend

The Bucharest Stock Exchange (BVB) was on three-day rising streak on September 1, leading investors to believe that the correction period is over and the advent of autumn will send the market soaring, as in the previous years, Ziarul Financiar daily reported on September 1.

The BET index has climbed over 3 percent over the last three days. The shares in the Financial Investment Companies (SIF) were top advancers, as they have gained more than six percent since August 30 trading session.

Even if most brokers consider the upbeat signs as pointing to a rallying market, some people deem the market rise as a return to normalcy after the late-August correction period.

The brokers with top brokerage company ING Securities say that there is still slack for increase in several Romanian shares, namely SIF and Petrom, which were targeted by foreign investors in August.

The oil companies have met with extremely heavy trading in the wake of zooming oil prices, which set them up for all-time highs. OMV skyrocketed by 100 percent from late 2004, Unipetrol by 98 percent, MOL by 78 percent, PKN by 59 percent, Petrom by 40 percent and Rompetrol by 8 percent.

Other blue-chip companies in late July and early August were the Financial Investment Companies. Most opinions on the stock market are bullish, as no storm clouds are gathering over the upward trend.

IV. FINANCE-BANKS

„Romania’s mid-2005 estimated Gross Domestic Product (GDP) stood at 110.263 billion RON in current prices, by 4.9 percent higher in real terms, as compared to the same period last year, the National Statistics Institute’s data say.